Question 1

In a service industry, direct materials are usually insignificant in amount and cannot easily be traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 2

An example of a fixed cost is

Accepted Answer

A)  total indirect material cost. 
B)  total hourly wages. 
C)  cost of electricity. 
D)  straight-line depreciation. 
A)  total indirect material cost. 
B)  total hourly wages. 
C)  cost of electricity. 
D)  straight-line depreciation.

Question 3

If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost is classified as a step cost.

Accepted Answer

A) True 
 B)False

Question 4

All costs related to the manufacturing function in a company are

Accepted Answer

A)  prime costs. 
B)  direct costs. 
C)  product costs. 
D)  conversion costs. 
A)  prime costs. 
B)  direct costs. 
C)  product costs. 
D)  conversion costs.

Question 5

Steelman Company manufacturers desks. The beginning balance of Raw Material Inventory was $4,500; raw material purchases of $29,600 were made during the month. At month end, $7,700 of raw material was on hand. Raw material used during the month was

Accepted Answer

A)  $26,400. 
B)  $34,100. 
C)  $37,300. 
D)  $29,600. 
A)  $26,400. 
B)  $34,100. 
C)  $37,300. 
D)  $29,600.

Question 6

Prepare a Schedule of Cost of Goods Manufactured (in good form) for the Chandler Company from the following information for June 20X8:
 $\begin{array}{ll}
\underline{\text {Inventries}}&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material}&\$6,700 & \$ 8,900 \
\text {Wotk in Process}&17,700& 22,650 \
\text { Finished Goods }&29,730 & 19,990
\end{array}$

Additional information: purchases of raw material were $46,700; 19,700 direct labor hours were worked at $11.30 per hour; overhead costs were $33,300.

Accepted Answer

The answer of Prepare a Schedule of Cost of Goods...

Question 7

The formula for cost of goods sold for a manufacturer is

Accepted Answer

A)  beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending Finished Goods Inventory. 
B)  beginning Work in Process Inventory plus Cost of Goods Manufactured minus ending Work in Process Inventory. 
C)  direct material plus direct labor plus applied overhead. 
D)  direct material plus direct labor plus overhead incurred plus beginning Work in Process Inventory. 
A)  beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending Finished Goods Inventory. 
B)  beginning Work in Process Inventory plus Cost of Goods Manufactured minus ending Work in Process Inventory. 
C)  direct material plus direct labor plus applied overhead. 
D)  direct material plus direct labor plus overhead incurred plus beginning Work in Process Inventory.

Question 8

Langley Company is a construction company that builds houses on special request. What is the proper classification of indirect material used? $\underline{\text { Prime }}\quad\underline{\text {Conversion }} \quad\underline{ \text { Variable} }$

Accepted Answer

A)  no no no 
B)  no yes yes 
C)  yes yes yes 
D)  yes no no 
A)  no no no 
B)  no yes yes 
C)  yes yes yes 
D)  yes no no

Question 9

Costs that can be conveniently traced to a cost object are referred to as ____________________ costs.

Accepted Answer

The answer of Costs that can be conveniently traced to...

Question 10

A cost that varies inversely with the level of production is known as a ____________________ cost.

Accepted Answer

The answer of A cost that varies inversely with the...

Question 11

Define a variable cost and a fixed cost. What causes changes in these costs? Give two examples of each.

Accepted Answer

A variable cost is one that remains cons

Question 12

In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a debit to

Accepted Answer

A)  Work in Process Inventory and a credit to Finished Goods Inventory. 
B)  Finished Goods Inventory and a credit to Cost of Goods Sold. 
C)  Cost of Goods Sold and a credit to Finished Goods Inventory. 
D)  Finished Goods Inventory and a credit to Work in Process Inventory. 
A)  Work in Process Inventory and a credit to Finished Goods Inventory. 
B)  Finished Goods Inventory and a credit to Cost of Goods Sold. 
C)  Cost of Goods Sold and a credit to Finished Goods Inventory. 
D)  Finished Goods Inventory and a credit to Work in Process Inventory.

Question 13

Period costs

Accepted Answer

A)  are generally expensed in the same period in which they are incurred. 
B)  are always variable costs. 
C)  remain unchanged over a given period of time. 
D)  are associated with the periodic inventory method. 
A)  are generally expensed in the same period in which they are incurred. 
B)  are always variable costs. 
C)  remain unchanged over a given period of time. 
D)  are associated with the periodic inventory method.

Question 14

The portion of an asset's value on the balance sheet is referred to as an expired cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following costs would be considered overhead in the production of chocolate chip cookies?

Accepted Answer

A)  flour 
B)  chocolate chips 
C)  sugar 
D)  oven electricity 
A)  flour 
B)  chocolate chips 
C)  sugar 
D)  oven electricity

Question 16

A selling cost is a(n) $\begin{array}{llcc}
 \underline{ \text {podiuct cost   }} &\underline{  \text { period cost  } }&\underline{  \text {  inventoriable cost} }\
\end{array}$

Accepted Answer

A)  yes yes no 
B)  yes no no 
C)  no yes no 
D)  no yes yes 
A)  yes yes no 
B)  yes no no 
C)  no yes no 
D)  no yes yes

Question 17

Costs incurred for monitoring or inspecting products are known as ____________________ costs.

Accepted Answer

The answer of Costs incurred for monitoring or inspecting products...

Question 18

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a ____________________ cost.

Accepted Answer

The answer of A cost that shifts upward or downward...

Question 19

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a step cost.

Accepted Answer

A) True 
 B)False

Question 20

Legend Company manufacturers tables. If raw material used was $80,000 and Raw Material Inventory at the beginning and end of the period, respectively, was $17,000 and $21,000, what was amount of raw material was purchased?

Accepted Answer

A)  $76,000 
B)  $118,000 
C)  $84,000 
D)  $101,000 
A)  $76,000 
B)  $118,000 
C)  $84,000 
D)  $101,000

Exam 1: Cost Terminology and Cost Behaviors

In a service industry, direct materials are usually insignificant in amount and cannot easily be traced to a cost object.

An example of a fixed cost is

If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost is classified as a step cost.

All costs related to the manufacturing function in a company are

Steelman Company manufacturers desks. The beginning balance of Raw Material Inventory was $4,500; raw material purchases of $29,600 were made during the month. At month end, $7,700 of raw material was on hand. Raw material used during the month was

The formula for cost of goods sold for a manufacturer is

Costs that can be conveniently traced to a cost object are referred to as ____________________ costs.

A cost that varies inversely with the level of production is known as a ____________________ cost.

Define a variable cost and a fixed cost. What causes changes in these costs? Give two examples of each.

In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a debit to

Period costs

The portion of an asset's value on the balance sheet is referred to as an expired cost.

Which of the following costs would be considered overhead in the production of chocolate chip cookies?

A selling cost is a(n)

Costs incurred for monitoring or inspecting products are known as ____________________ costs.

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a ____________________ cost.

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a step cost.

Legend Company manufacturers tables. If raw material used was $80,000 and Raw Material Inventory at the beginning and end of the period, respectively, was $17,000 and $21,000, what was amount of raw material was purchased?

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